3M 2005 Annual Report Download - page 90

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Related Party Activity:
Purchases from related parties (largely related to companies in which 3M has an equity interest) totaled
approximately $141 million in 2005 ($124 million in 2004 and $113 million in 2003). Receivables due from related
parties (largely related to receivables from employees for relocation and other ordinary business expense advances)
totaled approximately $37 million in 2005 ($34 million in 2004 and $44 million in 2003). 3M sales to related parties
totaled approximately $5 million in 2005 ($91 million in 2004 and $96 million in 2003). Indebtedness to 3M from
related parties was not material in 2005, 2004 and 2003.
Legal Proceedings:
The Company and some of its subsidiaries are involved in numerous claims and lawsuits, principally in the United
States, and regulatory proceedings worldwide. These include various products liability (involving products that the
Company now or formerly manufactured and sold), intellectual property, and commercial claims and lawsuits,
including those brought under the antitrust laws, and environmental proceedings. The following sections first describe
the significant legal proceedings in which the Company is involved, and then describe the liabilities and associated
insurance receivables the Company has accrued relating to its significant legal proceedings. Unless otherwise stated,
the Company is vigorously defending all such litigation.
Antitrust Litigation
As previously reported, LePage’s Inc., a transparent tape competitor of 3M, filed a lawsuit against the Company in
June 1997 alleging that certain marketing practices of the Company constituted unlawful monopolization under the
antitrust laws. Following the entry of a verdict in LePage’s favor and appellate rulings sustaining that verdict, direct
and indirect tape purchasers filed a number of purported class actions and individual actions against the Company in
various state and federal courts. These cases allege that the Company competed unfairly and unlawfully
monopolized alleged markets for transparent tape, and they seek injunctive relief and to recover on behalf of
variously defined classes of direct and indirect purchasers damages in the form of price overcharges the Company
allegedly charged for these products.
Indirect Purchaser Antitrust Litigation – In December 2005, the federal court in California granted preliminary
approval of the previously disclosed settlement agreement of twelve tape-related class actions brought on behalf
of indirect purchasers who did not purchase tape for resale. The final approval hearing is currently scheduled for
April 2006. The Company also entered into an agreement in the fourth quarter of 2005 to resolve two other cases
involving indirect purchases not for resale originally brought as class actions in state courts in Massachusetts and
Florida. The complaints in those cases were amended to reflect the same products as those in the California
federal class action and will be dismissed and the settlement agreement will be effective once the settlement of
the twelve class actions is given final court approval and after securing state court approval where necessary.
Direct Purchaser Antitrust Litigation – In November 2005, the Company agreed to settle three of the four pending
direct purchaser transparent tape antitrust cases-- two individual actions and a purported class action on behalf of
direct purchasers of both 3M branded and private label tape. If the settlement agreement executed by the parties to
the purported class action receives federal court approval and all conditions in the agreement are satisfied, the
settlement will terminate the purported class action and release the claims of the affected putative class members
nationwide. The settlements of the two individual actions are subject to the parties signing a settlement agreement
but are not conditioned on court approval. The proposed class action settlement does not affect the certified class
action brought by direct purchasers of 3M transparent and invisible tape (but not private label tape) that is pending in
a federal court in Pennsylvania and does not constitute any admission of liability by the Company. The court has
scheduled trial of that action to commence in late spring of this year.
Breast Implant Litigation
The Company and certain other companies were named as defendants in past years in numerous claims and
lawsuits alleging damages for personal injuries of various types resulting from breast implants formerly
manufactured by the Company or a related company. The vast majority of claims against the Company have been
resolved. The Company does not consider its remaining probable liability to be material. Information concerning
the associated insurance receivable and legal proceedings related to it follows in the paragraph entitled Breast
Implant Insurance Receivables.
Respirator Mask/Asbestos Litigation
For more than 25 years, the Company has defended and resolved the claims of over 370,000 individual claimants
alleging injuries from occupational dust exposures. As of December 31, 2005, the Company is a named defendant,
with multiple co-defendants, in numerous lawsuits in various courts that purport to represent approximately